USDJPY:
Investors remain on guard amid the possibility of Japanese authorities’ intervention to prevent a destabilizing fall of the national currency. This, along with a general weakening of sentiment in stock markets, proved to be the key factor that provided some support to the safe-haven Yen.
The US Dollar (USD) is consolidating on a pullback from a five-month high and is contributing to the soft supply tone around the USD/JPY pair. Nevertheless, any significant Yen appreciation seems unlikely amid dovish statements from the Bank of Japan (BoJ) signaling that the next rate hike is imminent. On the contrary, markets continue to discount bets that the Federal Reserve (Fed) will cut interest rates in June.
Expectations that the gap between U.S. and Japanese interest rates will remain wide may further deter JPY bulls from aggressive betting, which in turn will help limit the USD/JPY pair’s decline. Investors will now turn their attention to the economic agenda in the US, where the ADP private sector employment report and the ISM services PMI will be released. These data, as well as speeches by influential FOMC members, including Fed Chairman Jerome Powell, should provide fresh impetus.
Trading recommendation: Trade predominantly with buy orders from the current price level
Origin: FreshForex
